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All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Comments below related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About |

I'm having computer troubles.  That is why these posts have been limited or missing lately.  At least I was able to get these bullish percents loaded this morning.

Last week's bullish percents above and this week's bullish percents below.

Red is a column of O's in a downtrend, blue is a column of X's in an uptrend.  Below 30% is oversold, and above 70% is overbought.  Yellow is a shift down, green is up. | INDEX |

Commodities and their related equities have been strong as shown by the strength in the international, metals, materials bullish percents.  However, I wouldn't count on a new lasting uptrend considering the overbought general market.  Plus, the US Dollar remains relatively strong at the moment, particulary now that there is little chance of a Fed Funds cut and some talk of an increase.  This should keep the US Dollar relatively strong and therefore work against commodities and the commodity producing stocks.

Weakness in technology carried over to this week, following through on the weakness from a week ago.  However, the SOX showed some strength on Friday so it is an area to watch.  The Dow Industrials is finally showing signs of underlying weakness as well after being consistently strong for 6-7 months with barely a correction.

High bullish market sentiment readings, higher long-term rates, an overbought equities market, peaking breadth and volume indicators...  all point to a market with high risk for an intermediate correction.

All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Comments below related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About |

The trend in the major commodities bottomed last week, at least temporarily, and moved higher so that many are now above their moving average again.  The US Dollar and the Euro continue their dance with each other to see which will confirm or change trend.  With Fed Fund Futures anticipating the first short-term rate cuts in early 2008, it is difficult to see why the US Dollar would start to move sharply lower.  That is, unless European short-term rates start to move sharply higher, which is also unlikely.

All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Comments below related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About |

Today was strong in the markets with decent volume on some of the indexes.  Zen Trader gets a big congratulation for his post in the pre-market that very accurately made the call for a strong day.

All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Comments below related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About |

A quick look at the Elliott Wave chart for the NASDAQ.  It could be building for another push higher.  The wave count will be clearer in a few days as the market tests the two resistance levels above. 

All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Comments below related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About |

Sentiment in the better known surveys has shifted strongly in favor of bullish sentiment, and as a contrary indicator, sentiment is now working against equity prices.

The surveys show that since the lows in mid-June, advisors and investors have become more and more bullish along with the rising stock market.  Last week it appeared that bullish sentiment had peaked, at least temporarily, and bullish sentiment had started to decline as the market reached overbought levels.  Now it appears the surveys show another strong shift towards bullishness which is not good for the equity markets. 

The better known surveys, II, AAII and MV, clearly reflect a strong market that has rallied for over 6 months and is now at a level of high-risk for a correction.  These polls consistently reach their bullish extremes near the peak of an intermediate cycle.

The Birinyi blogger poll is still at a very low level of bulls and indicates a segment of investors with a consistently high degree of skepticism about this market.  However, this group of investors has been on the wrong side of the market for months so it is hard to read into the poll results.

Sentiment analysis is an important component when following the markets, and is considered a “contrary” indicator.  Contrary because if too many people are bearish then there aren't enough sellers left, the balance tips to buyers, and the market starts to advance.  If too many people are bullish, most funds are already invested, the balance tips to sellers and the market weakens.  One way to determine if investors are bearish or bullish is by taking surveys and tracking at what levels these polls indicate investors are at the extremes of bearish or bullish sentiment.

The figure above shows four polls and their current sentiment levels.  Keep in mind, sentiment analysis is not a science and only provides very general information.  Sentiment is not a signal to take action, but is a warning about the current state of the markets.  There have been many occasions when bullishness reached high levels well before the market started to weaken.

All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Comments below related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About |

A look below at the long-term trend in rates using 30-year bonds.

Another look at long-term trend in rates using 10-year bonds.

The charts below show the short-term trend in long-term rates is working against equity prices at the moment.

A look below at the yield curve.

All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Comments below related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About |

The relative strength chart below of the major equity indexes appears to reflect lower oil and higher rates.  The Transports are probably outperforming due to the low oil prices, and the Utilities and Small Caps are probably underperforming at least partly due to the higher rates. 

The relative strength chart below of the AMEX SPDR sectors shows strength in consumer discretionary, materials and health care.  The lower gas prices are helping retail, and health care reflects rotation into an undervalued and relatively safe area of the market.  The strength in materials is a little surprising.  Last week technology appeared to be the new leader but has quickly fallen out of favor again.

Some notes on the major equtiy indexes and industries below.

All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Comments below related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About |

Last week's bullish percents are above and this week's are below.

Who would have thought last week that the Dow Transports would go from a column of O's at the 40-level to a column of X's in the 70-level in one week.  The collapse of oil prices drained funds from energy to the areas that benefit from low oil prices such as airlines.  Also, last week's strength in technology turned on a dime and is now weakness leading the Technology bullish percent lower.  The funds coming out of tech appears to be moving into the safety of strong balance sheets and under valued areas such as health care and big drug companies. 

The sector rotation appears to be hinting at some internal weakness in the market, but the signals are not decisive yet.  However, the weakness of the last few weeks in the bullish percents does show a clearer picture of internal market weakness as the indexes remain at high levels but on the strength of fewer and fewer companies. 

All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Comments below related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About |

The following two charts should have been included in the Wednesday Sentiment post, but I forgot to include them so here they are now.

The chart below shows put buying has trailed off sharply which usually corresponds with intermediate tops. 

The market breadth charts below are the percentage of stocks above the 50-day and 200-day which topped out in October and November showing several months of weakening internals.

All charts and comments intended for education and discussion purposes only. No investment recommendations are being offered. Comments below related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Sentiment | THU - Commodities & Currencies | FRI - Market Breadth | SAT - Bullish Percents | About |

Interesting chart below created from an original chart by Steve Saville. 

Gold and Silver shares have a lot to prove before the trend resumes as the chart below shows.

The dollar needs to start trending lower if gold and silver are going to break out.

The US Dollar and the Euro at a crucial junction.

Below is the larger picture of the commodities trend.  The downside momentum has slowed and it is unclear whether this is a pause before the downtrend begins again or whether a low base is building for the entire group.